Public collections
278. One way in which charities raise funds is through
public collections. There are basically two types of public
collection covered by different acts dating respectively from
1916 and 1939:[309]
a) Street collections - collections in the street
or other public places - the current street collections legislation
does not cover semi-public places like public spaces in railway
stations or in airports. There is also a lack of clarity about
whether it covers solicitation for direct debit commitments or
not - some local authorities take the view that such collections
need to be licensed, others do not.
b) House-to-house collections.
The current situation
279. Public collections have often caused concern
because of their potential to create a public nuisance and the
risk that they may lead to abuse - for example, people fraudulently
claiming to be collecting for charity. The present regulatory
regime is based on the Police, Factories etc, (Miscellaneous
Provisions) Act 1916 for street collections and the House-to-house
Collections Act 1939. Essentially, this legislation provides
as follows.
a) Street collections (except for London) are
under the control of local authorities, which have powers to license
them (but are not obliged to). Most local authorities (but not
all) require street collections to have a licence.
b) House-to-house collections (except for London)
are licensable by local authorities. The legislation provides
for a national system and every local authority is expected to
license house-to-house collections (but they do not necessarily
do so). But a charity collecting over a large part of the country
can get an Exemption Order from the Home Office - this exempts
them from local authority control, so they do not have to obtain
a licence from a large number of local authorities but they are
still required to notify the local authority of their intention
to collect in their area.
280. In London, both street collections and house-to-house
collections are controlled by the police instead of local authorities.
Local authorities have different views on the licensing of the
collection of direct debit commitments. However, generally speaking
such public collections are licensed when conducted house-to-house
but not in the street. Under the current legislation, local authority
decisions not to grant a house-to-house collection licence can
be appealed to the Home Office. There is no formal right of appeal
against decisions not to grant a street collections licence.
281. There has long been a feeling in the sector
and Government that this messy system should be replaced by one
which was more integrated and provided better and more comprehensive
regulation. Provisions for an integrated system of control were
enacted in Part III of the Charities Act 1992 but never
brought into force.
The draft Bill
282. The draft Bill and associated measures will
set up a new comprehensive scheme of regulation, the key elements
of which are:
a) All local authorities would be required
to license all public collections (except very small and local
ones - e.g. carol singing), including direct-debit collections
and collections in semi-public areas such as supermarket forecourts
or railway stations. In London, responsibility for public collections
would be transferred from the police to the London boroughs.
b) Licensing would have two stages:
i. The Local Authority would issue a certificate
of fitness. This would certify that the collection promoter
was fit to carry out a collection (e.g. had no relevant criminal
convictions). Once issued, the certificate would be valid for
up to five years.
ii. The Local Authority would issue a permit
based on whether there was capacity in their area (that
is, whether or not too many collections were being conducted).
c) House-to-house collections would be licensed
in the same way but (i) only a certificate of fitness would be
required and (ii) house-to-house collections of goods (as
opposed to money) would require no licensing at all but in both
cases notification to the local authority would be required.
d) Instead of National Exemption Orders issued
by the Home Office allowing charities to collect house-to-house
over large areas of England and Wales, there would be a "lead
authority" system. Under this, a charity could get a certificate
of fitness from the local authority in whose area its registered
office is located. This would then apply throughout England and
Wales.
e) For street collections, the organisation would
then only need to get a permit from the local authority in whose
area it wished to collect.
f) For house-to-house collections, the organisation
would only need to notify the local authority in whose
area it was collecting of the dates and locations of collections.
283. Clause 39 of the draft Bill requires promoters
to notify door to door collection of goods to the local authority,
specifying the purpose for which the proceeds of the appeal are
to be applied, the date or dates on which the collection is to
be conducted, the location within which the collection is to be
conducted (and such other matters as shall be prescribed). Such
notifications must be made at least 14 days before the collection
date.
284. Clause 41 of the draft Bill provides that applications
for permits for street collection of cash and direct debit commitments
cannot be made more than six months before the start of the collection
and should be made at least 14 days before the collection date.
285. These proposals have implications for charities
and local authorities and the Regulatory Impact Assessment attached
to the draft Bill provides estimates of their costs and benefits.
Benefits and costs
286. The benefits of the proposed scheme are not
quantified but are said by the Home Office to be:
a) Significantly reducing the confusion which
currently exists among charities, local authorities, professional
fund-raising organisations and the public;
b) Promoting greater uniformity in the application
of the law;
c) Increasing public confidence in public collections.[310]
287. The Regulatory Impact Assessment (RIA) identifies
three main sources of cost for the proposals:
a) Costs to local authorities outside London.
The RIA says these should be negligible: "The scope of the
current licensing regime would be extended under the new scheme
but the number of checks undertaken by each individual local authority
would be reduced".[311]
b) Costs to the London local authorities as a
result of the transfer of the licensing regime from the police
to them. The RIA estimates this as £32,500-£103,584
a year.[312]
c) The costs of appeals to the Magistrates' courts
against the refusal or withdrawal of applications for a certificate
of fitness or a permit. The RIA estimated these costs as £14,104-£26,404
a year.[313]
288. The Institute of Fundraising, the Institute
of Licensing, and the Local Government Association all told us
that the RIA's assertion that the new scheme would be cost-neutral
was untrue.[314] The
PFRA also told us that they believed the estimated costs for London
local authorities were far too low. They were based on the Metropolitan
Police's costs of £33,000 for 226 applications. But, the
PFRA told us, the police figures were based on the number of cash
collections, the only ones the police licensed. Local authorities,
under the new scheme, would have to license non-cash collections
(e.g. soliciting donations by direct debit). PFRA thought that
a conservative estimate of the number of applications to London
local authorities would be 14,000 a year. The fact that London
local authorities had no previous experience of licensing charitable
collections also meant that extra costs would be incurred as they
climbed the learning curve.[315]
289. LGA sent us a submission setting out the reasons
they thought extra costs would be incurred by local authorities
as a result of the new scheme. These included:[316]
a) It is not compulsory to license street collections
and some local authorities currently do not do so. The new arrangements
will make it compulsory for all local authorities in England and
Wales to licence street collections in their area. Authorities
which had not operated the old arrangements will not make offsetting
savings by moving to the new arrangement therefore, as the RIA
assumes.
b) The new arrangements increase the types of
collections to be licensed (e.g. solicitations for direct debits):
this will increase the number of applications.
c) Local authorities will have a duty to provide
fair access to applicants - this means they will have to develop
a licensing policy. The LGA estimate this will cost about £12
million.
d) The lead authority system may lead to an increase
in the number of organisations conducting collections across several
local authorities, leading to further costs.
290. A further - and most important - source of
cost, however, would be enforcement of the new arrangements. This
has not been taken account of in the RIA. It was emphasised to
us that without enforcement the new arrangements simply would
not produce the benefits they promised. The Institute of Fundraising
told us:
"Enforcement is a very important point
because under the current regulation enforcement is pretty much
not carried out at all. It is getting new structures in place
and ensuring that they are properly funded. If that does not happen
then the benefit of the universal application of the proposals
simply will not be felt because it will not be enforceable".[317]
291. The RIA itself lends support to this point:
"Some local authorities have said that they
are unable to undertake or undertake only limited levels of enforcement
in connection with the current licensing regime. Of the 33 local
authorities spoken to in relation to this matter 10 indicated
that they undertook no enforcement action
a further seven
said they were able to undertake a limited or small amount of
enforcement work".[318]
292. We recommend that the Home Office revisit
its financial estimates in discussion with the charitable sector
and Local Government Association with a view to ensuring the real
Bill is accompanied by a more through assessment of the costs
and benefits of the scheme for public collections.
293. The Committee was also concerned that the measures
in the Bill should not place an undue extra burden on charities,
and also that the Charity Commission should have the resources
to take on any extra duties. We recommend that the Home Office
consider both the regulatory burdens and the resource issues carefully
in bringing forward proposals in the new legislation.
Evidence
294. In considering the workability of the fund-raising
proposals we have examined three issues raised in the evidence:
a) Will the new scheme combat abuse?
b) Are the notification arrangements satisfactory?
c) Should certificates of fitness to conduct
public collections be issued by local authorities?
295. Evidence on the current extent of abuse in public
collections pointed in two directions. The Regulatory Impact Assessment
says:
"There are no figures currently available on
the level of bogus street collections but respondents to [..]
consultation, generally did not believe that bogus street collecting
activity represented a major problem."[319]
296. The Institute of Fundraising (IOF) told us:
"Levels of fraud in relation to public activities
are very low. Most of the evidence about it is anecdotal anyway
but a case of fraud in relation to a charity has a disproportionate
impact on the public and it is covered by the media. You very
seldom see 'Charities Performing Well Today'. What you do see
is 'Illegal Rose Selling Scam Nets £30,000 in Bolton Pubs'".[320]
297. On the other hand, we received first-hand testimony
from the Institute of Licensing that bogus fund-raising in Leeds
was a very serious problem (this evidence is summarised in the
box below). The Local Government Association (LGA) supported this
evidence. So did the witness from the Home Office, who told us:
"I cannot see anything which persuades me that Leeds would
be a special case. If the question is might this be going on in
other cities of similar size, I think the indication must be yes
because I do not think Leeds is special".[321]